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United States Government Accountability Office:
GAO:
Report to the Ranking Member, Committee on Foreign Relations, U.S.
Senate:
September 2013:
Climate Change:
State Should Further Improve Its Reporting on Financial Support to
Developing Countries to Meet Future Requirements and Guidelines:
GAO-13-829:
GAO Highlights:
Highlights of GAO-13-829, a report to the Ranking Member, Committee on
Foreign Relations, United States Senate.
Why GAO Did This Study:
In 2009, the United States and other developed nations pledged to
contribute funding approaching $30 billion in new and additional
assistance between 2010 and 2012 for developing countries to address
climate change. This type of assistance is called “climate finance”
and funding for this period is known as “fast-start finance.” The
pledge was made under the Framework Convention, a treaty that seeks to
address climate change. State is the lead agency responsible for
reporting the United States’ FSF contributions between 2010 and 2012
and plans to continue reporting on U.S. climate finance in the future.
GAO was asked to review climate finance. This report examines (1) the
extent to which the United States contributed to FSF, (2) how State
collected and reported U.S. FSF data, and (3) what is known about the
effectiveness of U.S. FSF activities. To address these objectives, GAO
reviewed FSF data, interviewed agency officials, and visited three
countries receiving significant FSF assistance in three regions.
What GAO Found:
To implement the United States’ fast-start finance (FSF) commitment,
the Department of State (State) reported that the United States
contributed $7.5 billion in fiscal years 2010 through 2012 for a
variety of activities related to climate change. State, the U.S.
Agency for International Development (USAID), and the Department of
the Treasury (Treasury) provided $2.5 billion for activities under the
Global Climate Change Initiative (GCCI) that were designed to address
climate change as a primary goal. State reported that USAID and other
agencies, including the Millennium Challenge Corporation (MCC), the
Export-Import Bank of the United States, and the Overseas Private
Investment Corporation provided $4.9 billion for activities that were
not part of the GCCI but had climate-related benefits. Contributions
consisted of grants, loans, development finance, and export credit.
The majority of these funds were reported as supporting mitigation
activities focused on clean energy or sustainable landscapes.
According to State, the U.S. FSF contributions were “new and additional”
because the funding was appropriated on an annual basis and not
guaranteed from one year to the next.
Between 2010 and 2012, State improved its method for collecting data
for its FSF reports, but it is uncertain how it will meet future
reporting requirements and guidelines. Following its initial FSF
report in fiscal year 2010, State developed a structured data
collection tool to facilitate and standardize data collection across
the agencies. Nonetheless, challenges in tracking climate change
assistance remain. USAID, the largest FSF contributor, is not able to
track climate change obligations and expenditures because of the lack
of a dedicated State/USAID budget code for climate change assistance.
While the FSF reports were voluntary, reporting is required beginning
in 2014 based on decisions by the Conference of the Parties to the
United Nations Framework Convention on Climate Change (Framework
Convention). Future reports must contain climate finance data elements
that State did not include in the FSF reports and, in some cases, does
not currently collect. For example, State does not collect information
on the annual status of climate finance contributions provided,
committed, and/or pledged, as specified in the new reporting
guidelines. State officials said that they have not determined how
they will collect and report this information.
The overall effectiveness of U.S. FSF activities is difficult to
determine because of the challenges involved in monitoring and
evaluating assistance to address climate change. These challenges
include difficulties in measuring the effects of individual activities
within the larger context of global climate change, and the fact that
many of these activities are just beginning to be implemented. Under
the GCCI, State, USAID, and Treasury fund activities with a primary
goal of addressing climate change, and State and USAID are refining
their climate change performance indicators to improve monitoring of
these activities’ results. USAID is also drafting an evaluation plan
for its climate change assistance. Treasury does not directly monitor
and evaluate its climate change funding but requires the multilateral
institutions that receive and implement this funding to monitor and
evaluate these activities. Other key agencies’ FSF activities were not
part of the GCCI, and these agencies’ approaches to monitoring and
evaluation vary based on their respective missions and requirements.
For example, MCC primarily assesses its projects on the basis of the
progress made in achieving its goal of poverty reduction.
What GAO Recommends:
To ensure the United States meets future climate finance reporting
requirements and guidelines under the Framework Convention, GAO
recommends that State determine how it will collect and report climate
finance information and review current capabilities for meeting the
requirements and guidelines. GAO also recommends that State, in
consultation with USAID, consider providing a budget code to improve
tracking of climate change assistance. State agreed with GAO’s
recommendations.
View [hyperlink, http://www.gao.gov/products/GAO-13-829]. For more
information, contact Thomas Melito at (202) 512-9601 or
melitot@gao.gov, or J. Alfredo Gomez at (202) 512-4101 or
gomezj@gao.gov.
[End of section]
Contents:
Letter:
Background:
State Reported That the United States Contributed $7.5 Billion to FSF,
Supporting a Variety of Activities:
State Improved Its Data Collection over the FSF Reporting Period, but
Has Not Determined How It Will Meet Future Reporting Requirements and
Guidelines:
Determining Effectiveness of FSF Activities Poses Challenges; State
and USAID Are Refining Their Approach to Monitoring and Evaluating
Activities That Address Climate Change:
Conclusions:
Recommendations for Executive Action:
Agency Comments:
Appendix I: Objectives, Scope, and Methodology:
Appendix II: Comments from the Department of State:
Appendix III: GAO Contacts and Staff Acknowledgments:
Tables:
Table 1: Funding for Global Climate Change Initiative (GCCI)
Activities, Non-GCCI Activities, and Total U.S. Fast-Start Finance
(FSF) Funding by Agency, Fiscal Years 2010-2012 (dollars in millions):
Table 2: Placement of Climate Change as a Sub-Element in State and
USAID's Foreign Assistance Framework:
Table 3: Comparison of the Future Framework Convention Biennial
Reporting Criteria and State's Current Data Collection for Climate
Finance:
Table 4: State and USAID's Standard Global Climate Change Indicators:
Figures:
Figure 1: Comparison of Areas of Focus within UN Framework Convention
and U.S. Global Climate Change Initiative Pillars:
Figure 2: Total U.S. Fast-Start Finance (FSF) Funding by Agency,
Fiscal Years 2010-2012 (dollars in millions):
Figure 3: U.S. Fast-Start Finance (FSF) Funding by Adaptation and
Mitigation Activities, Fiscal Years 2010 through 2012 (dollars in
millions):
Abbreviations:
CIF: Climate Investment Funds:
EPA: Environmental Protection Agency:
Ex-Im: Export-Import Bank of the United States:
Framework Convention: United Nations Framework Convention on Climate
Change:
FSF: fast-start finance:
GCCI: Global Climate Change Initiative:
GEF: Global Environment Facility:
MCC: Millennium Challenge Corporation:
OMB: Office of Management and Budget:
OPIC: Overseas Private Investment Corporation:
State: Department of State:
TFCA: Tropical Forest Conservation Act:
Treasury: Department of the Treasury:
USAID: U.S. Agency for International Development:
USTDA: U.S. Trade and Development Agency:
[End of section]
GAO:
United States Government Accountability Office:
441 G St. N.W.
Washington, DC 20548:
September 19, 2013:
The Honorable Bob Corker:
Ranking Member:
Committee on Foreign Relations:
United States Senate:
Dear Senator Corker:
Increasing concentrations of greenhouse gases in the atmosphere have
altered the earth's heat and radiation balance and contributed to
changes in the earth's climate, according to the National Research
Council and the United States Global Change Research Program.
Greenhouse gases trap some of the sun's energy and prevent it from
returning to space, warming the atmosphere. The effects of a warmer
climate could have important consequences for human health and welfare
by altering weather patterns, increasing the frequency and intensity
of storms and droughts, changing crop yields, and contributing to
flooding in coastal areas, among other things. While climate change
can have positive and negative effects, the World Bank reported that
the most pronounced negative effects are likely to occur in less
economically developed countries.
In 2009, the United States and other developed countries jointly
committed to providing developing countries with funding approaching
$30 billion in assistance between 2010 and 2012 and committed to
jointly mobilize $100 billion a year in public and private funds by
2020.[Footnote 1] These funds are intended to be used for activities
that aim to address the causes and impacts of climate change. We refer
to this funding as "climate finance," and we refer to climate finance
for the 2010 to 2012 period as "fast-start finance" (FSF). This
commitment was made under the auspices of the United Nations Framework
Convention on Climate Change (hereinafter referred to as the Framework
Convention), a treaty that seeks to address the challenges posed by
climate change, with 194 countries and the European Union as Parties.
[Footnote 2] The U.S. Department of State (State) is the lead agency
for international climate negotiations and for reporting to the
secretariat of the Framework Convention on progress in fulfilling the
U.S. climate finance commitments. In three annual reports to the
Framework Convention secretariat, State reported on the amount and
characteristics of U.S. FSF. Each report included a summary of the
U.S. FSF funding, an overview of global and regional activities, and
fact sheets on countries that received funding for that fiscal year.
You asked us to review aspects of the assistance the United States
provided to address its FSF commitment under the Framework Convention.
This report examines (1) the extent to which the United States
contributed to FSF and the types of activities this funding supported,
(2) how State collected and reported data on U.S. FSF funding and its
plans for future reporting, and (3) what is known about the
effectiveness of U.S. FSF activities.
To address these objectives, we focused primarily on the following six
U.S. agencies that provided over 95 percent of the U.S. FSF funding:
State, the U.S. Agency for International Development (USAID), the
Department of the Treasury (Treasury), the Millennium Challenge
Corporation (MCC), the Export-Import Bank of the United States (Ex-
Im), and the Overseas Private Investment Corporation (OPIC). We
interviewed agency officials and reviewed agency strategies, planning
and programming documents, indicators, and monitoring and evaluation
plans and reports. In addition, we reviewed and analyzed FSF funding
data, criteria, and guidance. We also reviewed Framework Convention
climate finance commitments, reporting guidelines, and requirements.
We conducted fieldwork in three countries--Ethiopia, Indonesia, and
Mexico--which we selected based on a range of factors, including FSF
funding levels and sources, areas of focus, project implementation
status, geographic diversity, country income level, recommendations
from agencies, and congressional interest. These countries serve as
illustrative and not representative examples. In these countries, we
met with U.S. embassy officials and implementing partners, host-
country government officials, multilateral development banks, and
other bilateral donors. We also visited project sites and met with
local implementing partners and recipients of the assistance. Appendix
I provides more information on our scope and methodology.
We conducted this performance audit from May 2012 to September 2013 in
accordance with generally accepted government auditing standards.
Those standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our
findings and conclusions based on our audit objectives. We believe
that the evidence obtained provides a reasonable basis for our
findings and conclusions based on our audit objectives.
Background:
The Framework Convention Provides the Primary International Forum for
Addressing Climate Change:
In 1992, the United States and most other countries negotiated the
Framework Convention with the aim of stabilizing atmospheric
concentrations of carbon dioxide and five other greenhouse gases.
[Footnote 3] The Framework Convention includes a pledge from developed
countries to assist developing countries in implementing these
objectives.[Footnote 4] The Framework Convention also recognizes the
special situation of countries designated by the UN as least developed
countries. The Conference of the Parties is the supreme decision-
making body of the Framework Convention and all Parties to the
Convention are represented at the Conference of the Parties. In 2001,
the Conference of the Parties further noted that least developed
countries have a lower capacity to cope with and adapt to the impacts
of climate change, and recognized certain developing countries as
particularly vulnerable to those impacts.
Efforts to address climate change under the Framework Convention
generally fall into two categories--mitigation and adaptation.
According to the Framework Convention, measures to mitigate climate
change include efforts to limit manmade emissions of greenhouse gases
and enhance greenhouse gas "sinks." The Framework Convention defines
"sink" as any process, activity, or mechanism that removes a
greenhouse gas, an aerosol, or a precursor of greenhouse gas from the
atmosphere. For example, preserved forests, which store carbon
dioxide, serve as greenhouse gas sinks. The burning of fossil fuels
for energy accounts for about two-thirds of global manmade emissions.
The remaining third stems from industrial and agricultural processes,
land use changes such as deforestation, and waste such as methane
emitted from landfills.
The Framework Convention website defines adaptation as adjustments in
ecological, social, or economic systems in response to actual or
expected climate change and its effects, to alleviate potential
damages or to benefit from opportunities associated with climate
change.[Footnote 5] For example, an adaptation effort might involve
assessing vulnerabilities to rising sea levels, droughts, or fires,
and then planning and executing activities that address these
vulnerabilities.
Developed Countries Made Voluntary Climate Finance Commitments through
the Framework Convention:
One of the key outcomes of the 2009 meeting of the Conference of the
Parties was the Copenhagen Accord. As part of the accord, the United
States and other developed countries voluntarily pledged to provide up
to $30 billion in "new and additional, predictable, and adequate"
funding, now commonly known as fast-start finance, to help developing
countries address climate change over the 2010 to 2012 period.
According to State officials, the fast-start pledge, and the longer-
term goal of mobilizing $100 billion per year from public and private
sources by 2020, was critical to securing the broader 2009 Copenhagen
Accord. State explained that the Copenhagen Accord included a
commitment from major emerging economies to list, for the first time,
the specific actions they would take to limit their emissions. Under
this Accord, developed countries also agreed to a balanced allocation
of resources between climate change mitigation and adaptation
activities, with adaptation funding as a priority for countries most
vulnerable to climate change impacts.[Footnote 6] In addition, the
Conference of the Parties established the Green Climate Fund, intended
to centrally channel multilateral funding for climate finance.
According to State and Treasury officials, as of July 2013, the design
and structure of this institution was still under development, and the
Fund was not yet operational.
In subsequent meetings of the Conference of the Parties, developed
countries reaffirmed various Copenhagen climate finance commitments.
At the Cancun meeting in 2010, the Conference of the Parties invited
developed countries to submit information on their climate finance for
the 2010 to 2012 FSF period to the secretariat of the Framework
Convention for compilation into an information document. These reports
during the FSF period were voluntary and were not based on specific
reporting requirements. At the 2011 meeting in Durban, the Conference
of the Parties agreed to adopt reporting requirements and guidelines
as part of required reports beginning in 2014. At the meeting in
Durban, the Conference of the Parties also agreed that developed
countries should:
* describe how their financial assistance addresses the needs of
developing countries regarding adaptation and mitigation;
* provide information on the financial assistance they provided,
committed, and/or pledged to help developing parties mitigate
greenhouse gas emissions or adapt to adverse effects of climate change
and any economic and social consequences of response measures;
* describe the amount, type, funding source, financial instrument, and
sector of their financial assistance, and indicate how they classified
funding as new and additional; and:
* report on their efforts to leverage private financial sources.
The Durban agreement also included provisions for developed countries
to further develop plans for long-term climate finance beginning in
2012.
The United States Elevated Climate Change as a Development Priority:
Following the FSF commitment, the United States elevated global
climate change as a development priority through government-wide
strategies. First, in May 2010, the White House issued the President's
National Security Strategy, which emphasizes, among other things, the
need to increase investments to address global climate change to
improve the resilience of developing nations, minimize the impacts of
climate change, conserve forests, and promote clean energy
technologies. Then, in September 2010, the White House announced the
Global Climate Change Initiative (GCCI), which seeks to integrate
climate change considerations into foreign assistance.[Footnote 7]
According to State officials, the administration began placing a
priority on assistance to address climate change in its fiscal year
2010 budget request, which reflected a significant increase over
baseline funding levels. Beginning in fiscal year 2010, State, USAID,
and Treasury began receiving annual appropriations that were used to
finance a wide range of bilateral and multilateral programs and
activities under the GCCI. The GCCI focuses U.S. efforts to address
global climate change within three pillars, or areas of focus--
adaptation, clean energy, and sustainable landscapes. Specifically,
State describes activities within each of these pillars as follows:
Adaptation activities increase resilience to climate change for the
most vulnerable communities in areas such as food security, water
management, coastal management, and public health by helping
communities respond to increasing climate and weather-related risks.
Clean energy activities support decreasing emissions growth through
mitigation activities such as the deployment of clean energy
technologies, policies, and practices. They often include support for
infrastructure projects. According to State, the United States' clean
energy activities focus on countries and sectors offering significant
emission growth reduction potential over the long term, as well as
countries that offer the potential to demonstrate leadership in
sustained, large-scale deployment of clean energy.
Sustainable landscapes activities focus largely on helping countries
address unsustainable forest clearing and support the sustainable
management of forests at the national and local levels. The United
States' sustainable landscape efforts focus on developing countries
such as Indonesia and Mexico that have demonstrated a commitment to
address climate change and have a high potential to reduce emissions
from deforestation, forest degradation, and other land-use activities.
The Framework Convention and the GCCI have similar areas of focus,
although two of the U.S. GCCI pillars--sustainable landscapes and
clean energy activities--involve activities defined as mitigation
activities under the Framework Convention (see figure 1).
Figure 1: Comparison of Areas of Focus within UN Framework Convention
and U.S. Global Climate Change Initiative Pillars:
[Refer to PDF for image: illustration]
UN Framework Convention:
Climate change areas of focus:
* Adaptation;
* Mitigation.
U.S. Global Climate Change Initiative:
Climate change areas of focus:
* Adaptation;
* Clean energy;
* Sustainable landscapes.
Source: GAO analysis of State and UN data.
[End of figure]
State Reported That the United States Contributed $7.5 Billion to FSF,
Supporting a Variety of Activities:
To implement its FSF commitment, State reported that, from fiscal year
2010 through 2012, the United States contributed $7.5 billion to
support a variety of activities that address the causes and impacts of
climate change. U.S. FSF funding included activities that were part of
the GCCI and were designed to address climate change as a primary
goal, as well as activities that were not part of the GCCI, but were
reported to have climate-related benefits. U.S. FSF funding included a
variety of financial instruments, such as grants, loans, loan
guarantees,[Footnote 8] and export credit insurance.[Footnote 9] The
majority of the U.S. FSF funds supported mitigation activities focused
on clean energy or sustainable landscapes. According to State
officials, all U.S. FSF funding was considered to be "new and
additional" resources because the funding was appropriated on an
annual basis. State, USAID, and Treasury financed activities with a
primary goal of addressing climate change, as part of the GCCI, which
represented about one-third of total U.S. FSF funding.[Footnote 10]
USAID and agencies such as MCC, Ex-Im, and OPIC, provided funding for
activities that they reported as having climate-related benefits but
were not funded as part of the GCCI. This funding represented about
two-thirds of total U.S. FSF funding. These non-GCCI activities may
have primary goals other than addressing climate change, such as
poverty reduction and food security, but they were reported to have
climate-related benefits.
State Reported That Multiple U.S. Agencies Contributed $7.5 Billion
over the FSF Period, Largely for Mitigation Activities:
State reported that 17 U.S. agencies contributed a total of $7.5
billion to FSF in fiscal years 2010 to 2012, largely for activities
with mitigation benefits.[Footnote 11] Six of the 17 agencies--State,
USAID, Treasury, MCC, Ex-Im, and OPIC--provided about 97 percent of
the total $7.5 billion in U.S. FSF funding, according to State
documents. Figure 2 shows the breakdown of total U.S. FSF funding by
key agency.
Figure 2: Total U.S. Fast-Start Finance (FSF) Funding by Agency,
Fiscal Years 2010-2012:
[Refer to PDF for image: pie-chart]
Total: $7.457 billion.
United States Agency for International Development (USAID), $2.223
billion: 30%;
Overseas Private Investment Corporation (OPIC), $1.991 billion: 27%;
Department of the Treasury, $1.112 billion: 15%;
Export Import Bank (Ex-Im), $749 million: 10%;
Millennium Challenge Corporation (MCC), $702 million: 9%;
Department of State, $456 million: 6%;
Other (the remaining 11 agencies that have contributed to FSF), $224
million: 3%.
Source: GAO analysis of State data.
[End of figure]
About 80 percent ($6.1 billion) of the total U.S. FSF funding
supported mitigation activities and the remaining 20 percent ($1.4
billion) supported adaptation activities. While developed countries
agreed to provide a "balanced allocation for adaptation and
mitigation," the Copenhagen Accord did not define the meaning of a
"balanced allocation."[Footnote 12] State officials told us that in
the absence of such a definition, State's approach to the U.S. FSF
commitment was to focus on those activities that were most cost
effective and had the greatest near-term impact, and that these tended
to be mitigation activities. State officials also said that the United
States planned to develop and expand adaptation activities in the
future. Figure 3 shows U.S. FSF funding for adaptation and mitigation
activities in each of the three FSF years, as reported by State.
According to State's FSF report, U.S. funding for mitigation
activities was provided in the form of grants, loans, loan guarantees,
or insurance assistance, whereas U.S. funding for adaptation
activities was provided solely in the form of grants.
Figure 3: U.S. Fast-Start Finance (FSF) Funding by Adaptation and
Mitigation Activities, Fiscal Years 2010 through 2012:
[Refer to PDF for image: vertical bar graph]
Fiscal year: 2010;
Adaptation: $436.0 million;
Mitigation: $1,556 billion.
Fiscal year: 2011;
Adaptation: $560.2 million;
Mitigation: $2.628 billion.
Fiscal year: 2012;
Adaptation: $399.5 million;
Mitigation: $1.878 billion.
Source: GAO analysis of State's 2012 FSF Report.
Note: State's 2012 FSF report includes climate finance data from
fiscal years 2010-2012.
[End of figure]
While developed countries pledged to provide "new and additional
resources," the Copenhagen Accord did not define this term or specify
the level of funding that each nation would provide to reach the
overall target. State officials said that the United States defined
"new and additional resources" as any funding appropriated for
activities addressing climate change in a given year because
appropriations are enacted each year and therefore are not guaranteed
in future years. Hence, under State's definition, all funding
allocated from an appropriation in a given year is considered "new and
additional" even if the activities had been funded in prior years. For
example, as part of U.S. FSF funding, State included a total of $107.8
million from State and the Environmental Protection Agency (EPA) for
the Multilateral Fund for the Implementation of the Montreal Protocol,
which was established in 1990. According to UN officials, the
definition of "new and additional" varies by country and only a few
countries have publicly stated their definition. For example, Germany
defined "new and additional" as funds that were "additional to the
support related to addressing climate change already provided in 2009,
as well as sourced from innovative financing mechanisms, namely the
auctioning of emissions certificates."[Footnote 13]
State officials said that the United States increased its funding to
address climate change after the FSF commitment. Before the
commitment, State collected data from State, USAID, and Treasury on
activities with a primary goal of addressing the causes and impacts of
climate change, and State reported that funding for these activities
tripled from 2009 to 2010. During the 2010 to 2012 FSF period, State
continued to collect data on such activities and categorized them as
part of the GCCI. State also began to collect data on other activities
from USAID and from additional agencies, including Ex-Im and OPIC,
which were reported as having climate-related benefits but were not
funded as part of the GCCI. For this report, we define the latter type
of activity as "non-GCCI activities." These activities may not have a
primary goal of addressing climate change. For example, the
development and distribution of drought-resistant seeds as part of a
USAID food security project is intended to decrease the vulnerability
of farmers in food-insecure areas. It also can be considered as a non-
GCCI climate adaptation activity because it helps communities respond
to increasing climate risks.
GCCI Activities, with a Primary Goal of Addressing Climate Change,
Represented One-Third of Total U.S. FSF Funding:
GCCI activities implemented by State, USAID, and Treasury with a
primary goal of addressing global climate change represented about one-
third of U.S. FSF funding. State reported that these three agencies
provided about $2.5 billion for these activities from appropriations
enacted for foreign operations over the FSF period. These agencies are
the core implementers of the GCCI and addressing global climate change
is a part of each of these agencies' overall strategies. Table 1 shows
the agencies' funding for GCCI activities with a primary goal of
addressing climate change, funding for non-GCCI activities, and total
contributions to U.S. FSF funding.
Table 1: Funding for Global Climate Change Initiative (GCCI)
Activities, Non-GCCI Activities, and Total U.S. Fast-Start Finance
(FSF) Funding by Agency, Fiscal Years 2010-2012:
Agency: State;
Funding for GCCI activities: $455 million;
Funding for non-GCCI activities: $1 million;
Total FSF funding: $456 million.
Agency: USAID[A];
Funding for GCCI activities: $1.022 billion;
Funding for non-GCCI activities: $1.201 billion;
Total FSF funding: $2.223 billion.
Agency: Treasury;
Funding for GCCI activities: $1.112 billion;
Funding for non-GCCI activities: $0;
Total FSF funding: $1.112 billion.
Agency: MCC[B];
Funding for GCCI activities: $0;
Funding for non-GCCI activities: $702 million;
Total FSF funding: $702 million.
Agency: Ex-Im[C];
Funding for GCCI activities: $0;
Funding for non-GCCI activities: $749 million;
Total FSF funding: $749 million.
Agency: OPIC[D];
Funding for GCCI activities: $0;
Funding for non-GCCI activities: $1.991 billion;
Total FSF funding: $1.991 billion.
Agency: Other[E];
Funding for GCCI activities: $0;
Funding for non-GCCI activities: $224 million;
Total FSF funding: $224 million.
Agency: Total;
Funding for GCCI activities: $2.589 billion;
Funding for non-GCCI activities: $4.868 billion;
Total FSF funding: $7.457 billion.
Source: GAO analysis of State data.
Notes:
[A] U.S. Agency for International Development (USAID).
[B] Millennium Challenge Corporation (MCC).
[C] Export-Import Bank (Ex-Im).
[D] Overseas Private Investment Corporation (OPIC).
[E] "Other" represents the remaining 11 agencies that have contributed
to FSF.
[End of table]
State and USAID Contributed U.S. FSF Funding through Bilateral and
Multilateral Assistance:
Over the 2010 to 2012 FSF period, State contributed $455 million in
funds to developing countries to support activities with a primary
goal of addressing global climate change as part of the GCCI. State
finances bilateral and multilateral activities in partnership with
other U.S. agencies and multilateral funds. For example, State
provided bilateral funding for the U.S. Africa Clean Energy Finance
initiative with a goal of mobilizing U.S. investments in clean energy
and energy efficiency across Africa.
State also contributed toward the Least Developed Countries Fund, a
multilateral fund supporting urgent adaptation needs of least
developed countries. In Ethiopia, for example, the Least Developed
Countries Fund helped design and implement adaptation activities, such
as planting fruit trees to provide additional food sources and to
reforest the land, to reduce vulnerability to the effects of climate
change.
Side bar:
USAID and U.S. Forest Service Carbon Flux Tower in Mexico Supported
Sustainable Landscapes; USAID funding of approximately $1 million,
through an interagency agreement with the U.S. Forest Service,
supports carbon monitoring sites in Mexican forests. With this
funding, the U.S. Forest Service supported the establishment of two
carbon flux towers in Mexico, which, according to project
implementers, provide data on carbon concentrations by measuring the
net exchange of carbon between the atmosphere and the forest. These
sites are intended to provide a carbon monitoring benchmark for future
sustainable landscape projects. The photo below shows a carbon flux
tower in Hidalgo, Mexico. [Figure: photograph] Source: GAO.
[End of side bar]
Over the FSF period, USAID contributed over $1 billion in the form of
grants to developing countries for GCCI activities that counted toward
U.S. FSF. For example, USAID's activities that address climate change
in Mexico include mitigation projects supporting the development of
the country's low emissions development strategy, the planning and
development of a strategy to reduce emissions from deforestation and
degradation, and the development of systems to monitor progress
against the strategies' goals. For instance, USAID is working with the
U.S. Forest Service to improve Mexico's capacity for monitoring,
reporting, and verification of carbon stored in forests (see sidebar).
Starting in fiscal year 2010, USAID reported increased funding for
activities designed to promote adaptation and increased funding for
mitigation activities to a lesser extent. Toward the end of the FSF
period, USAID released its 5-year Climate Change and Development
Strategy, intended to strengthen the integration of climate change
into USAID programming and accelerate the implementation of activities
that focus on adaptation and low emissions development.[Footnote 14]
Treasury FSF Contributions Largely Supported Multilateral Clean Energy
Activities:
State reported that Treasury contributed about $1.1 billion toward
U.S. FSF funding mostly through contributions to multilateral funds
that finance activities promoting adaptation, clean energy, and
sustainable landscapes.[Footnote 15] According to Treasury officials,
these multilateral funds provide concessional loans and grants through
multilateral development banks and other international institutions.
After the FSF commitment and in line with the GCCI, Treasury
acknowledged the importance of addressing climate change in its
strategic plan. Over the FSF period, the majority of Treasury funding--
about $915 million--supported the multilateral Climate Investment
Funds (CIF), which involve financing instruments to support developing
countries' efforts to mitigate and manage the challenges of climate
change by providing grants and other financing instruments that
leverage financing from the private sector, multilateral development
banks, and other sources.[Footnote 16] For example, one investment
fund--the Clean Technology Fund--provided a loan for a private-sector
clean energy wind farm in Mexico. Another financing instrument--the
Forest Investment Program--will be used to provide loans and grants to
the government of Indonesia to develop activities to reduce
deforestation and forest degradation and promote forest management.
State reported that Treasury also contributed about $196 million to
two other programs, the Global Environment Facility (GEF) and the
Tropical Forest Conservation Act's bilateral debt-for-nature program.
According to Treasury, the GEF is intended to help developing
countries address biodiversity, climate change, and other
environmental problems.[Footnote 17] In East Africa, for example, the
GEF supported sustainable transportation solutions. State included
about 50 percent (about $148 million) of Treasury's contribution to
the GEF as part of FSF. Treasury officials stated that 26 percent of
the trust fund's projects support clean energy and 24 percent focus on
sustainable land use, while the remaining 50 percent do not focus on
addressing climate change and are not included as FSF. State also
included as FSF funding all of Treasury's contributions, about $48
million, to the Tropical Forest Conservation Act's bilateral debt-for-
nature program. Under this program, the United States "redirects" debt
payments that would have been due to the U.S. government into forest
conservation funds in the beneficiary country. These funds make
grants, mainly to local nongovernmental organizations and community
groups, to support forest conservation activities.[Footnote 18]
Non-GCCI Activities Represented about Two-Thirds of U.S. FSF Funding:
Over the 2010 to 2012 FSF period, non-GCCI activities with reported
climate-related benefits, implemented by multiple agencies,
represented about two-thirds of U.S. FSF funding. According to U.S.
agency officials, these activities were counted toward the U.S. FSF
commitment but were not necessarily funded as a result of the
commitment. State reported that 16 agencies provided about $4.9
billion that was counted toward FSF through these non-GCCI activities.
Four agencies--USAID, MCC, Ex-Im, and OPIC--provided the majority of
this funding, representing almost $4.6 billion of the reported U.S.
FSF total contributions (see table 1 above).[Footnote 19] These four
agencies used different mechanisms to finance non-GCCI activities,
with USAID and MCC providing grants, Ex-Im providing export
credit,[Footnote 20] and OPIC providing development finance.[Footnote
21] Over the FSF period, total U.S. funding for non-GCCI activities
varied from about $1.1 billion in fiscal year 2010 to $2.4 billion in
2011, to $1.4 billion in fiscal year 2012.
USAID provided $1.2 billion in grants for activities that primarily
supported development needs such as food security and global health
but were also reported to have climate-related benefits. These non-
GCCI activities also may be counted toward other government goals and
initiatives. For example, USAID supports climate change adaptation
activities in Ethiopia, which USAID implemented as part of its food
security program. As part of the President's Feed the Future
initiative, the USAID mission in Ethiopia initiated a multiyear food
security project that promotes increasing agricultural growth capacity
in several chronically food-insecure areas of the country and also
incorporates adaptation activities such as introducing drought-
resistant crops. According to State and USAID in Ethiopia, these
activities also have reported climate-related benefits because they
reduce vulnerability to climate change. The USAID Ethiopia mission
also supported other activities that had reported climate change
adaptation benefits--such as land rehabilitation and construction of
irrigation structures--as part of its contribution to the Productive
Safety Net Program that the government of Ethiopia launched in 2005 to
address chronic food insecurity (see sidebar).
Side bar:
USAID and MCC Provided Grants to Fund Non-GCCI Activities with Climate-
Related Benefits:
USAID Dam Project in Ethiopia Supported Adaptation to Climate Change;
As part of USAID's efforts to improve food security to rural
communities in Ethiopia that experience increasingly frequent
droughts, USAID funds dam construction to help collect silt and store
rainwater. The dam below was built in partnership with USAID.
According to project implementers, the dam collects rainwater as it
flows down the valley, which reduces erosion and replenishes moisture
in the soil while retaining rainwater for future use. [Figure:
photograph] Source: GAO.
[End of side bar]
In the FSF reports, State included $702 million in grants from MCC for
non-GCCI activities because parts of MCC's compact grants are reported
to support activities with climate-related benefits in five developing
countries. Four of the five compacts were signed during the FSF
period, and one was signed prior to the commitment.[Footnote 22]
[Footnote 23] For example, MCC signed a compact with the government of
Indonesia for a total of $588 million of which $332 million supported
a project (known as the Green Prosperity Project) intended to increase
renewable energy and sustainable land use practices, and strengthen
the capacity for low carbon development. In another example, MCC
signed a compact with the government of Moldova in which, in
conjunction with its investment in the rehabilitation of several large
irrigation systems, MCC is funding a $2 million river basin management
program to improve Moldova's capacity to manage its limited water
resources in light of increasing demand for water and the expected
effect of climate change. MCC's goal is to reduce poverty by
addressing the partner countries' priorities for achieving sustainable
economic growth, which may involve addressing climate change impacts.
According to MCC officials, the agency has no specific goals or
objectives related to climate change, but its agreements can link
poverty reduction and development with climate-related goals when a
country's priorities involve climate change concerns.
Ex-Im Provided Export Finance and OPIC Provided Development Finance
for Non-GCCI Activities:
According to State's 2012 FSF report, Ex-Im provided about $750
million through a range of financial products--such as direct loans,
loan guarantees, and insurance--that supported non-GCCI clean energy
activities. For Ex-Im's financial products, State counted the nominal
value of Ex-Im's commitments made to eligible projects during the 2010
to 2012 FSF period. For example, Ex-Im provided nearly $200,000 in
insurance to a solar power-generating system in Mexico; State included
this entire liability amount toward the FSF total. According to Ex-Im
officials, Ex-Im's export finance that supports clean energy projects
is part of its larger mission to help U.S. firms export goods. Ex-Im
has a carbon policy that aims to increase the private sector
incentives and demand for renewable energy exports. This followed a
congressional directive that at least 10 percent of Ex-Im's annual
authorizations should be used for renewable energy technologies or
energy efficient end-use technologies.[Footnote 24] According to Ex-Im
officials, the agency has struggled to meet this target because of the
market-driven nature of its work and because it can only fund
activities with a reasonable expectation of repayment. On the basis of
our prior work, we found that Ex-Im faces challenges in achieving its
target but has increased its clean energy financing since the FSF
commitment.[Footnote 25] (See the sidebar for an example of an Ex-Im
financed clean energy project.)
Side bar:
Ex-Im Financed a Wind Farm in Mexico That Supported Clean Energy as a
Climate-Related Benefit; Ex-Im provided a loan for exporting U.S.
manufactured wind turbines to a wind farm in Oaxaca, Mexico, pictured
below. This wind farm harnesses wind energy and connects to Mexico's
national grid. It is the same wind farm that also received a loan from
the Clean Technology Fund, to which Treasury provided funds. [Figure:
photograph] Source: GAO.
[End of side bar]
State reported that during the 2010 to 2012 FSF period, OPIC provided
about $2 billion for development finance that supported non-GCCI
activities through a range of financial products such as loans, loan
guaranties, and insurance. In general, OPIC provides development
finance for clean energy projects as part of its larger mission to
support U.S. private investment in emerging markets. As with Ex-Im,
State counted the nominal value of OPIC's commitments to eligible
projects during the fast-start period. For example, OPIC provided an
investment guarantee of $20.3 million for the construction of two
hydroelectric facilities in Mexico; State included the value of that
loan toward the U.S. FSF funding total. OPIC also has an Environmental
and Social Policy Statement that responds to a congressional
requirement to reduce direct greenhouse gas emissions associated with
projects in OPIC's portfolio by 30 percent over 10 years.[Footnote 26]
According to State, OPIC financing with climate-related benefits has
increased substantially, from about $8.9 million in 2008 to an average
of $663.8 million annually during the FSF period.
State Improved Its Data Collection over the FSF Reporting Period, but
Has Not Determined How It Will Meet Future Reporting Requirements and
Guidelines:
State improved its method for collecting data for its FSF reports, but
it is uncertain how it will meet future reporting requirements and
guidelines agreed to under the Framework Convention. After the FSF
commitment, State faced a new and difficult challenge in collecting
and reporting on U.S. assistance to developing countries to address
climate change. Following its initial FSF report in fiscal year 2010,
State developed a structured data collection tool to facilitate and
standardize data collection across the agencies. Even with the data
collection tool, challenges for tracking assistance remain. State and
USAID do not have a dedicated budget code for tracking climate change
assistance. With USAID climate change funding allocated to numerous
missions, USAID, the largest FSF contributor, is unable to track GCCI
obligations and expenditures and must undertake a manual inventory to
obtain information on the types of climate change programs its
missions are undertaking. While the current FSF report submissions are
voluntary, reporting is required beginning in 2014 based on decisions
adopted by the Conference of the Parties.[Footnote 27] Future reports
must contain certain data elements on each country's climate finance
contributions that State did not include in the FSF reports and, in
some cases, does not currently collect. State officials stated that
they have not determined how they will collect and report this
information.
State Improved Its Data Collection Process for the 2011 and 2012
Reports:
Following the December 2009 FSF commitment, State faced challenges
collecting data on agencies' FSF contributions but improved its data
collection process during the 2010 to 2012 FSF period. Specifically,
State faced challenges collecting data on fiscal year 2010
contributions from agencies for the initial FSF report but in fiscal
year 2011 established a data collection tool in collaboration with the
Office of Management and Budget (OMB) and developed a database for
tracking FSF information. According to State officials, State's method
for collecting and reporting FSF data in fiscal year 2010 was less
structured than in the following 2 years because the United States
decided to prepare the FSF report partway through that fiscal year and
State did not have time to develop a structured data collection tool.
For fiscal year 2010, State gathered information on its own FSF
activities and those of USAID as part of State and USAID's broader
annual process to develop internal operational plans.[Footnote 28]
State and USAID's guidance on compiling these operational plans
included definitions of activities with addressing climate change as a
primary goal and activities with climate-related benefits, along with
a list of eligible FSF activities under each of the three GCCI
pillars. State did not, however, have an existing process to collect
these data from other agencies that contributed to FSF. State
officials said they reached out to individual agencies to obtain
information on funding level, administering agency, and intended
climate change benefits of each FSF activity. However, these officials
stated that they faced challenges in obtaining FSF data from agencies
other than State and USAID for the 2010 report.
For fiscal years 2011 and 2012, State established a structured data
collection tool and developed guidance in collaboration with OMB to
facilitate and standardize data collection for the 15 agencies other
than State and USAID. This guidance included criteria that agencies
could use to determine if an activity should count toward FSF. For
those years, State collected data on its own FSF activities and those
of USAID through the process to develop internal operational plans, as
it had for the 2010 report, and asked OMB for assistance in collecting
FSF data from the remaining agencies.[Footnote 29] State then worked
with OMB to develop the data collection tool for collecting FSF data
from those agencies. According to State officials, OMB's participation
in the data collection effort improved the FSF data obtained from
other agencies for the 2011 and 2012 reports. The tool consisted of a
template for requesting data such as the name of the relevant
activity, funding level, recipient country, and narrative description.
State and OMB developed guidance to accompany the tool, which
officials from both agencies said included a modified version of the
guidance used by State and USAID to develop their operational plans
and an adapted list of eligible FSF activities.[Footnote 30]
State did not create a database to compile the FSF submissions for the
2010 report but developed one for the 2011 and 2012 reports. In fiscal
year 2010, State compiled the FSF data in a narrative document that
became the 2010 FSF report. By fiscal year 2011, State had developed a
database for FSF submissions that included aggregated funding data at
the country, pillar, and agency level but did not include funding data
at the individual activity level. In fiscal year 2012, State improved
the database by tracking the funding data at the individual activity
level.
State officials said that for each of the 3 years, they went through
an extensive review process to determine whether data included in the
agencies' submissions should count toward the reported FSF total.
These officials stated that a small group of State staff reviewed and
discussed the submissions, using their judgment to determine if they
should qualify for FSF. In some cases, the review process involved
follow-up discussions with agency officials. State officials said that
the review process for each of the three FSF reports took
approximately 3 months.
State and USAID Do Not Have a Dedicated Budget Code for Tracking
Assistance to Address Climate Change:
While State has improved its process for collecting FSF data with
these changes, some challenges remain in tracking USAID's climate
finance data. According to USAID officials, State and USAID currently
do not have a dedicated budget code for assistance that addresses
climate change, which has created difficulties for tracking and
gathering USAID data on such funding. USAID's budget and accounting
systems link to State and USAID's standardized program structure for
foreign assistance, which is sometimes referred to as the foreign
assistance framework.[Footnote 31] This structure establishes a
hierarchy of strategic objectives, program areas, program elements,
and sub-elements. USAID officials stated that USAID's financial
managers currently code obligations down to the program element level
but not the sub-element level. Therefore, USAID does not have
obligation data for assistance that addresses climate change because
climate change is currently a sub-element. Specifically, climate
change is one of eight sub-elements under the Clean Productive
Environment program element (see table 2).
Table 2: Placement of Climate Change as a Sub-Element in State and
USAID's Foreign Assistance Framework:
Strategic Objective 4: Economic Growth;
Program Area 4.8: Environment;
Program Element 4.8.1 Natural Resources and Biodiversity;
Program Element 4.8.2 Clean Productive Environment:
Sub-Element 4.8.2.1 Clean Productive Environment Policy and Guidance;
Sub-Element 4.8.2.2 Clean Production;
Sub-Element 4.8.2.3 Clean Energy;
Sub-Element 4.8.2.4 Climate Change;
Sub-Element 4.8.2.5 Air Quality;
Sub-Element 4.8.2.6 Sound Management of Waste;
Sub-Element 4.8.2.7 Toxic Substances;
Sub-Element 4.8.2.8 Science and Technology as a Tool for Environmental
Decision-Making.
Source: State.
[End of table]
The absence of a dedicated budget code has implications for tracking
climate change assistance. According to USAID officials, to track
climate change programs below the level of which GCCI pillar they are
in (adaptation, clean energy, or sustainable landscapes), USAID has to
manually gather climate change funding data through a time-consuming
inventory of the numerous USAID missions' climate change programs.
USAID's accounting database tracks the program element code 4.8.2
(Clean Productive Environment), but this code also encompasses funding
other than climate change funding. In addition, not all climate change
funding may appear under the Climate Change sub-element 4.8.2.4. Funds
that support activities that address climate change may also appear
under other program element codes, such as natural resources and
biodiversity. These officials stated that elevating climate change to
a higher-level program area within the standardized program structure
would provide several benefits, including enabling them to better
track the agency's activities that address climate change and related
funding. This could also enhance the efficiency of efforts to track
U.S. assistance that addresses climate change, which is a long-term
priority of the administration and an integral component of U.S.
commitments made through the Framework Convention.
The foreign assistance standardized program structure also serves as
the foundation for State and USAID's budget requests, annual
operational plans, and performance reporting. The continuing
categorization of climate change as a sub-element rather than as a
program area does not appear to reflect State and USAID's actions
emphasizing climate change as a high priority. For example, State and
USAID have included climate change as one of eight outcome-focused
agency priority goals that reflect the highest priorities of both the
Secretary of State and the USAID Administrator. According to State and
USAID, these near-term goals advance the agencies' joint strategic
goals and reflect their strategic and budget priorities.
State and USAID officials said that State's Foreign Assistance Bureau
is leading a broader review of the foreign assistance standardized
program structure, but State officials did not provide us with a time
frame for completing this review. These officials stated that any
changes to the standardized program structure would have implications
for consistency with prior years. In addition, changing the placement
of climate change within the structure would also affect the
categorization of other environmental programs, and these
considerations must be thought through carefully before making any
changes.
The FSF Reports Contained Country Fact Sheets with Activity
Descriptions, but Did Not Include All FSF Activities and Funding:
State voluntarily issued three annual FSF reports that included
summary discussions of the U.S. funding totals and more detailed
country fact sheets with descriptions of activities; however, the
reports did not include a full list of all FSF activities and their
funding levels or information on the disbursement status of FSF
activities. State officials said that the FSF reports were intended
for the diplomatic objective of demonstrating U.S. progress in meeting
its fast-start commitment. State officials said that they shared the
country fact sheets with some developing countries at conferences and
negotiations and that this met their diplomatic objective of
demonstrating to developing countries that the United States was
providing adequate climate finance and meeting its commitment.
Regarding the reports' content, each report included fact sheets on
some of the countries that received funding for that fiscal year.
However, the fact sheets, as noted in the 2012 FSF report, did not
capture information on some sensitive activities. The country fact
sheets provided high-level information on total bilateral and
multilateral development finance and export credit contributions, and
narrative descriptions of some FSF activities that included the
funding level, administering agency, target beneficiaries, and
intended climate change benefits of each reported activity. For
example, the 2011 Mexico fact sheet noted that USAID provided $7
million to support the Government of Mexico in completing and
implementing its national strategy to reduce greenhouse gas emissions
from deforestation, focusing on helping the country strengthen
relevant policy frameworks and build institutional and technical
capacity that would reduce the rate of deforestation. While the fact
sheet provided funding information on the aggregate level and provided
examples of some individual activities, it did not identify all of the
activities supported by the $7 million under Mexico's national
strategy.
According to State officials, the FSF reports were not intended as a
financial accounting exercise. Because the FSF reports do not provide
a full list of all the activities and their funding levels, it was not
possible for us or other external parties to verify the reported $7.5
billion contribution over the FSF period. For fiscal years 2010 and
2011, two nongovernmental organizations tried to recreate the reported
total and were unable to account for the total reported amount.
[Footnote 32] One was able to account for 91 percent of the total by
analyzing publicly available information, and the other said that it
was difficult to reconcile the numbers from the FSF reports with other
publicly available budget data.
In addition, the FSF reports also did not include information on the
disbursement status of FSF activities because State did not request
disbursement information from other agencies and, instead, it
requested that agencies report on the amounts either appropriated or
obligated, which it included in the FSF reports using broad
characterizations such as "amount provided" or "investments." At any
given time, the amount disbursed can vary from the amount appropriated
or obligated, and the amount in the FSF reports may not have reflected
the implementation status of the activity.
During our country site visits, we found examples of projects that
were included in the FSF reports but had not begun implementation.
State included a $332 million MCC project in Indonesia in the 2011 FSF
report, but we found that the agreement for that project did not enter
into force until April 2013 and that MCC had not disbursed project
funding as of June 2013. In another example, State reported a $50
million OPIC activity in the 2011 Indonesia fact sheet but the
activity had not begun implementation at the time of our January 2013
site visit to Indonesia, and an OPIC official said the "future success
[of the project] appeared to be highly improbable." OPIC reported that
its $50 million commitment to the investment fund was canceled on May
14, 2013.
Future Climate Finance Reporting Will Require Information That Was Not
Included in the FSF Reports, and State Has Not Determined How it Will
Address These Requirements and Guidelines:
Climate finance reporting requirements and guidelines under the
Framework Convention have evolved, and State plans to continue
reporting on U.S. climate finance contributions; however, State has
yet to determine how it will collect and report on this information in
the future. In contrast to the current voluntary nature of the FSF
report submissions to the secretariat of the Framework Convention,
reporting will be required beginning in 2014 based on decisions
adopted by the Conference of the Parties in Durban in 2011 and in Doha
in 2012.[Footnote 33] The Conference of the Parties decided that
developed countries shall submit their first biennial reports to the
Framework Convention secretariat in January 2014 and use specific
reporting guidelines for the biennial reports to ensure that countries
provided consistent, transparent, comparable, accurate, and complete
information (see table 3 for a comparison of future reporting criteria
relative to the information currently collected and provided in the
FSF reports).[Footnote 34] The Conference of the Parties also plans to
consider the best approach for future reporting on climate-related
private finance at the next meeting when it discusses the reporting
guidelines.
Table 3: Comparison of the Future Framework Convention Biennial
Reporting Criteria and State's Current Data Collection for Climate
Finance:
Future reporting criterion: Status (provided, committed, and/or
pledged);
Data collected by State? No[A];
Included in Fast-Start Finance (FSF) reports? No.
Future reporting criterion: Private financial flows leveraged by
bilateral climate finance, to the extent possible;
Data collected by State? No[A];
Included in Fast-Start Finance (FSF) reports? No[B].
Future reporting criterion: Total amount (funding level) that is
climate specific;
Data collected by State? Yes;
Included in Fast-Start Finance (FSF) reports? Yes.
Future reporting criterion: Funding source (official development
assistance, other official flows, other);
Data collected by State? Yes;
Included in Fast-Start Finance (FSF) reports? No.
Future reporting criterion: Financial instrument (grant, concessional
loan, etc.);
Data collected by State? Yes;
Included in Fast-Start Finance (FSF) reports? Yes.
Future reporting criterion: Type of support (mitigation, adaptation,
cross-cutting);
Data collected by State? Yes;
Included in Fast-Start Finance (FSF) reports? No[C].
Future reporting criterion: Sector (energy, transport, etc.);
Data collected by State? Yes;
Included in Fast-Start Finance (FSF) reports? Yes.
Future reporting criterion: Additional information (parties should
report, as appropriate, on project details and the implementing
agency);
Data collected by State? Yes;
Included in Fast-Start Finance (FSF) reports? Yes.
Future reporting criterion: Explanation of how funds are climate-
specific;
Data collected by State? Yes;
Included in Fast-Start Finance (FSF) reports? No.
Future reporting criterion: Whether financial resources are new and
additional and how this was determined;
Data collected by State? Yes;
Included in Fast-Start Finance (FSF) reports? No.
Source: GAO analysis of State data and information from the United
Nations Framework Convention for Climate Change (Framework Convention).
Notes: To make the comparison shown in the table, we analyzed the
reports of the Conference of the Parties to the Framework Convention
in Durban (2011) and Doha (2012) and State FSF reports.
[A] State officials said they collect some of this information but not
as specified in the new reporting guidelines.
[B] In the 2012 FSF report, State provided an example of private funds
leveraged by OPIC.
[C] The 2012 FSF report included aggregate-level but not project-level
information.
[End of table]
We identified six biennial reporting criteria that State will be
expected to report on for climate finance contributions in 2014 but
did not report on in the FSF reports, including two for which State
does not currently collect data as fully as required by the Framework
Convention's new reporting criteria (see table 3). State officials
said that they have not determined how they will implement these 2014
reporting requirements and guidelines.
State does not currently collect all of the data needed to meet the
following two criteria.
* The annual status of climate finance contributions provided,
committed, and/or pledged. Beginning in 2014, developed countries will
be required to report on the amount of their climate finance
contributions provided, committed, and/or pledged and should explain
the methodologies used to specify the funds in each category. State
officials said that there are no agreed-upon definitions for provided,
committed, and pledged in the Framework Convention and that countries
may choose which status to use in filling out the table showing the
status of their climate finance contributions. State has not defined
these terms yet and does not collect status data on FSF funds
according to these categories. State has some status information for
FSF activities, but according to State officials, has not been
collecting this information according to the terms in the Framework
Convention reporting guidelines, as they are new guidelines.
* Private financial flows leveraged by bilateral climate finance. In
2011, the Conference of the Parties met in Durban and decided that
developed countries should report in their biennial reports, to the
extent possible, on private financial flows leveraged by bilateral
climate finance and policies and measures that promote the scaling up
of private investment in mitigation and adaptation activities in
developing countries. In April 2013, State and Treasury convened a
meeting to discuss how international donors could better coordinate to
use public finance to mobilize private investment in climate-friendly
infrastructure. However, State officials said that the parties did not
focus on how they would incorporate private sector sources into future
reporting on climate finance and that they will continue to work with
the international community to develop a methodology for collecting
the information. Adding information on private sources of financing
will add a layer of complexity to the already difficult task of
reporting on public sources of climate finance because, among other
things, information related to the financing and implementing of
private-sector projects is often proprietary.
State collects data for the following four elements, but did not
include this information in the FSF reports.
* The funding source (official development assistance, other official
flows, or other). State did not provide this information in the FSF
reports. According to State officials, State does collect this
information for all agencies.
* Type of support (mitigation, adaptation, cross-cutting). In 2014,
developed countries will be required to report on the type of support
provided--mitigation, adaptation, or cross-cutting (those activities
that support both mitigation and adaptation), and to the extent
possible, at the country, region, project, or program level. In the
fiscal year 2012 FSF report, State provided only aggregated
information on adaptation and mitigation contributions.
* An explanation of how each country determined that its funds are
climate-specific. State had criteria it used to determine which
activities counted as FSF for its internal reports and provided the
criteria to agencies to help them determine which activities to
include in their FSF submissions and which to exclude. Over the 2010
to 2012 FSF period, State refined the criteria to provide more
guidance on what to count as an activity with a primary goal of
addressing climate change versus what should count as having a climate-
related benefit. In the 2012 FSF report, State provided some
information on the methodology for counting activities with climate-
related benefits and some examples of activities under each pillar.
However, State did not publish the criteria in the FSF reports. State
officials said that these definitions for future climate finance
reporting are still being discussed with both the Framework Convention
and the Development Assistance Committee of the Organisation for
Economic Co-operation and Development (OECD). State officials also
said that they expect to be guided, in part, by those discussions, but
anticipate the criteria they use will be similar to those used for the
FSF reports.
* Whether financial resources are new and additional and how this was
determined. As mentioned earlier, the Framework Convention did not
define "new and additional resources," and in developing the FSF
reports State counted all funding for activities that address climate
change in developing countries as "new and additional." However, State
did not publicly define "new and additional" in its FSF reports, and
will be required to do so in the 2014 biennial report.
To meet certain future reporting requirements and guidelines,
developed countries will also need to provide information, such as
total funding level and financial instrument, in two tables--one for
contributions to multilateral funds and one for bilateral and regional
contributions--for the previous 2 years.[Footnote 35] The information
on bilateral and regional contributions is to be reported for each
recipient country, region, project, or program, to the extent
possible. State officials said that they are still in the process of
determining which is the most appropriate category--country, region,
project, or program--to use for organizing the bilateral table.
However, it is uncertain how State will meet the requirements to
report on the data elements, such as status or financial instrument,
if it reports at the country or region level since the myriad
activities in a given country or region may involve a variety of
financial instruments. State officials also said that they are still
determining the best use of their existing FSF database for future
required reporting, so it is currently unclear how State will collect
and maintain the data needed for the 2014 report.
Determining Effectiveness of FSF Activities Poses Challenges; State
and USAID Are Refining Their Approach to Monitoring and Evaluating
Activities That Address Climate Change:
The overall effectiveness of U.S. FSF activities is difficult to
determine because of the challenges involved in monitoring and
evaluating assistance to address climate change. Measuring the effects
of individual activities within the larger context of global climate
change is difficult, and many activities are just beginning to be
implemented. State, USAID, and Treasury fund FSF activities included
in the GCCI. As part of this initiative, State and USAID are refining
performance indicators to improve monitoring of the results of their
activities that address climate change. USAID is also drafting an
evaluation plan for its GCCI activities, although no evaluations have
been completed. Treasury does not directly monitor and evaluate its
GCCI funding, but requires the multilateral institutions that receive
and implement this funding to conduct monitoring and evaluation. Other
agencies, including MCC, Ex-Im, and OPIC funded activities that were
not part of GCCI, and these agencies take varying approaches to
monitoring and evaluating these activities based on their respective
missions and requirements.
Linking Climate Change Assistance to Outcomes Poses Challenges:
Efforts to monitor the outcomes and evaluate the longer-term impact of
assistance to address climate change involve several key challenges.
Measuring the effect of U.S.-supported mitigation activities on
climate change involves estimating what greenhouse gas emissions might
have been if the assistance had not been provided. Likewise, measuring
the effect of adaptation activities involves finding ways to estimate
what climate damages might otherwise have occurred. In addition,
because U.S. assistance to address climate change encompasses a wide
range of activities, the appropriate type of monitoring and evaluation
depends on each activity and its intent. Specific challenges to
monitoring and evaluating this assistance include the following:
* Assistance intended to address climate change occurs within a larger
context. In cases where U.S. funded activities are intended to
decrease emissions, it is difficult to measure their effect on climate
change when overall emissions and atmospheric carbon dioxide levels
are increasing. Climate change results from the long-term accumulation
of greenhouse gases in the atmosphere, and the Environmental
Protection Agency projects that greenhouse gas concentrations will
continue to increase in the future unless annual emissions decrease
substantially. In addition, according to a 2009 U.S. Global Change
Research Program assessment, the atmospheric concentrations of carbon
dioxide--the primary greenhouse gas--have been building up in the
Earth's atmosphere since the beginning of the industrial era in the
mid-1700s, primarily due to the burning of fossil fuels and the
clearing of forests.[Footnote 36] As noted by the National Research
Council in 2012, current carbon dioxide concentrations are nearly 40
percent higher than preindustrial levels, and, according to ice core
data, higher than at any point in the past 800,000 years.[Footnote 37]
* Monitoring and evaluation of activities under the three GCCI pillars
involves varying assumptions and uncertainties. For example, for
projects under the clean energy pillar, USAID and State monitor the
reductions in greenhouse gas emissions attributable to U.S.
assistance. However, attributing emissions reductions to a clean
energy project requires an assumption that the project displaced
existing or future sources of more carbon-intensive sources of
electricity, such as that generated by burning fossil fuels.
Therefore, the results and accuracy of monitoring and evaluation of
these projects will depend on the validity of the underlying
assumptions, which may be difficult to determine. It is also difficult
to determine whether individual forest protection projects under the
sustainable landscapes pillar materially influence overall emissions
from forests if the projects do not address the social and economic
forces contributing to forest degradation or destruction.
Deforestation and the conversion of forested lands to agriculture in
developing countries is a major source of greenhouse gas emissions.
Efforts to protect or enhance forests can lead to the increased
absorption of carbon dioxide from the atmosphere. However, our prior
work has found that protecting a forest does not necessarily decrease
the demand for the timber or conversion of forested land to other
uses.[Footnote 38] Instead, it may shift demand to other unprotected
forested lands through a process known as emissions "leakage."
[Footnote 39] In addition, our prior work has identified challenges in
measuring carbon stored by forests due to scientific uncertainties and
the potential for protected forests to later suffer degradation from
fire, storms, insect infestation, or future changes in land
management.[Footnote 40]
* Directly linking some activities to climate change outcomes is
difficult. USAID officials stated that some specific activities
intended to address climate change, such as training and capacity
building, are particularly difficult to link directly to climate
change outcomes, such as reductions in greenhouse gas emissions. For
example, some USAID projects focus on capacity building to support
recipient countries' regulatory or legal reforms and national climate
change plans, and may not have a direct link to greenhouse gas
emissions. While these activities may provide important benefits in
building local capacity, USAID officials acknowledged the challenges
in linking these types of activities to emissions reductions. In
Mexico, for example, USAID's assistance has focused, in part, on
supporting planning and policy development, including supporting the
implementation of the country's recently passed national climate
change law. USAID officials stated that it was not clear how these
types of activities will translate into greenhouse gas emissions
reductions. However, State and USAID officials also emphasized that
capacity-building efforts can yield important longer-term benefits,
even if they are difficult to link to short-term outcomes.
* Assistance to address climate change is relatively new, and it is
too early to assess outcomes. According to U.S. officials, many of the
U.S. FSF activities have not been completed and, in some cases, are
just beginning to be implemented. As discussed earlier, during our
country site visits, we found examples of U.S. FSF projects counted
toward the fiscal year 2010 or 2011 FSF totals that were only
beginning implementation. For example, according to MCC officials,
MCC's Green Prosperity project in Indonesia just began to be
implemented after the Compact entered into force in April 2013. While
MCC is developing a monitoring and evaluation plan for this project,
it is too early to assess its results or impact. Also in Indonesia,
USAID's Forest and Climate Support project has been slower to begin
implementation than originally anticipated, according to project
officials. Implementing officials said that no project evaluations
have been completed, although a midterm evaluation was beginning
during the time of our visit.
State and USAID Are Refining Indicators to Monitor Climate Change
Activities, and USAID Is Developing an Evaluation Plan:
State and USAID Are Refining Their Climate Change Indicators:
State and USAID use a combination of standard and custom indicators to
monitor U.S. FSF activities that are part of the GCCI and non-GCCI
activities reported to have climate-related benefits. Following the
launch of the GCCI in 2010, State and USAID developed a GCCI Indicator
Handbook to provide guidance for project implementers in monitoring
activities intended to address climate change, and the agencies have
continued to revise these indicators to improve measurement of climate
change activities. The handbook currently contains seven standard
indicators to monitor the performance of State and USAID's assistance
to address climate change, including, according to USAID officials,
two required outcome indicators. The first outcome indicator measures
the quantity of greenhouse gas emissions reduced or sequestered as a
result of the U.S. clean energy and sustainable landscapes projects.
The second outcome indicator measures the number of stakeholders with
increased capacity to adapt to the impacts of climate change as a
result of U.S. adaptation projects. The remaining five indicators
track outputs,[Footnote 41] such as the number of people receiving
training and the number of days of technical assistance provided (see
table 4).
Table 4: State and USAID's Standard Global Climate Change Indicators:
1. Indicator: Quantity of greenhouse gas emissions, measured in metric
tons of carbon dioxide equivalent,[A] reduced or sequestered as a
result of U.S. assistance;
Indicator type: Outcome[B].
2[C]. Indicator: Person hours of training completed in climate change
supported by U.S. assistance;
Indicator type: Output.
Indicator: Number of people receiving training in Global Climate
Change as a result of U.S. assistance;
Indicator type: Output.
3. Indicator: Amount of investment leveraged in U.S. dollars, from
private and public sources, for climate change as a result of U.S.
assistance;
Indicator type: Output.
4. Indicator: Number of institutions with improved capacity to address
climate change issues as a result of U.S. assistance;
Indicator type: Output.
5. Indicator: Number of stakeholders with increased capacity to adapt
to the impacts of climate variability and change as a result of U.S.
assistance;
Indicator type: Outcome[D].
6. Indicator: Number of days of U.S.-funded technical assistance
addressing climate change that is provided to counterparts or
stakeholders;
Indicator type: Output.
7. Indicator: Number of laws, policies, strategies, plans, agreements,
or regulations addressing climate change (mitigation or adaptation)
and/or biodiversity conservation officially proposed, adopted, or
implemented as a result of U.S. assistance;
Indicator type: Output.
Source: U.S. Agency for International Development (USAID).
Notes:
[A] The Environmental Protection Agency defines carbon dioxide
equivalent as a metric measure used to compare greenhouse gases based
upon their global warming potential.
[B] According to USAID officials, this indicator is required for clean
energy and sustainable landscapes projects.
[C] Either version of this indicator can be used to report on training
related to global climate change.
[D] According to USAID officials, this indicator is required for
adaptation projects.
[End of table]
These standard indicators are linked to U.S. foreign assistance
strategic objectives and intended to facilitate the aggregating and
reporting of quantitative information common to U.S. assistance across
recipient countries. State and USAID use the standard indicators in
performance reports that summarize project activities, achievements,
and difficulties encountered. USAID officials described the GCCI
Indicator Handbook as a first-generation resource for missions and
stated that they continue to seek opportunities to improve the
agency's climate change indicators, including by researching
indicators used by other agencies and donors.
In addition to standard indicators, State and USAID use custom
indicators to capture dimensions of projects that are specific to
individual countries and that are not reflected in the standard
indicators. For example, in Indonesia USAID uses a custom indicator to
track the number of people with access to modern energy services as a
result of renewable energy technologies through U.S. assistance. At
the project level, USAID's Indonesia Marine and Climate Support
project includes custom indicators on the number of people reached
through climate change public awareness campaigns and the number of
risk and vulnerability assessments completed by local governments.
USAID Is Developing an Evaluation Plan for Climate Change Activities:
USAID has begun drafting an overall evaluation plan for the GCCI in
accordance with its recently issued evaluation policy, and expects to
complete this initial evaluation plan in 2013. While USAID has not yet
completed evaluations of programs or activities under the initiative,
it has begun some evaluations, including evaluations of pilot programs
intended to integrate climate change goals into other USAID programs
in selected countries. In January 2011, USAID issued a new policy that
defines agency requirements for evaluations, including the commitment
that 3 percent of program budgets, on average, must be devoted to
external evaluations. The new policy defines two types of evaluations:
* Performance evaluations focus on what projects have achieved, how
they are being implemented, what expected results are occurring, and
other questions related to program design, management, and operational
decision making.
* Impact evaluations measure the change in development outcomes
attributable to a defined intervention and require a rigorous
counterfactual to control for factors other than the intervention that
might account for the observed change.
USAID's policy requires all large projects[Footnote 42] to have at
least one performance evaluation and that evaluations be timed so that
findings will be available to inform decisions about new strategies,
project designs, and procurements. The policy further requires
activities to undergo impact evaluation, if feasible, if they use new
approaches or untested hypotheses and if USAID anticipates expanding
them.[Footnote 43] As previously discussed, USAID issued its Climate
Change and Development Strategy in 2012, and USAID officials commented
that the evaluation policy has since shaped the agency's approach to
how it will evaluate its assistance intended to address climate change
by putting greater emphasis on long-term impact evaluations. USAID's
climate change strategy includes a results framework with strategic
objectives and intermediate results, including a combined strategic
objective for clean energy and sustainable landscapes, and a separate
strategic objective for adaptation.
USAID officials stated that the development of the evaluation plan
included revising and updating the results frameworks to provide
separate and more detailed frameworks for each of the three GCCI
pillars: adaptation, clean energy, and sustainable landscapes.
According to USAID officials, these results frameworks will provide a
more detailed hypothesis, or a theory of change, to underpin USAID's
work in the three pillars. These officials further stated that in
developing these results frameworks, they have reached out to
monitoring and evaluation consultants and are conducting literature
reviews to assess the hypotheses and assumptions outlined in the
frameworks, including, for example, their assertion that a country's
enabling environment is key to reducing greenhouse gas emissions. In
addition, these officials said that they are conducting a manual
inventory of programs addressing climate change across USAID missions
worldwide and selecting missions to conduct impact evaluations of
these programs.
Although the evaluation plan has not been completed, USAID officials
stated that the agency has initiated some evaluations of its pilot
program to integrate climate change goals into other programs, such as
the Feed the Future initiative. So far, USAID has competitively
selected 10 USAID overseas missions for pilot integration projects,
including a project in Ethiopia that aims to improve resilience to
climate change by helping communities address conflicts over scarce
natural resources. USAID officials stated that several of the missions
participating in this pilot have developed evaluation plans.
Treasury Delegates Monitoring and Evaluation of FSF Activities to
Multilateral Institutions:
In contrast to USAID's and State's bilateral programs, Treasury
officials stated that they require the monitoring and evaluation of
multilateral FSF activities funded through the Climate Investment
Funds (CIF) and the Global Environment Facility (GEF) to be conducted
by the multilateral development banks and other international
institutions that implement these activities. These implementing
institutions have their own monitoring and evaluation processes,
including requirements both at the trust fund level (e.g., the Clean
Technology Fund) and the implementing agency level (e.g., the World
Bank). Treasury officials stated that the department does not directly
fund CIF or GEF projects in specific countries, but provides annual
contributions to these trust funds, which are implemented by
multilateral development banks and international institutions, such as
the Asian Development Bank or the United Nations Development
Programme. Treasury officials stated that they lack the resources to
directly monitor or evaluate CIF or GEF projects, and instead rely on
a common system of oversight of these funds through participation on
their governing boards. The Treasury officials stated that as members
of the CIF and GEF boards, they review regular progress reporting on
country programs and individual projects. GEF officials told us, for
example, that Treasury actively participates on the GEF Council
reviewing project reporting and querying implementers on project
results. GEF officials further stated that implementing organizations,
such as the World Bank, conduct performance monitoring using standard
GEF indicators and tracking tools and also conduct final project
evaluations.[Footnote 44]
Each of the CIF funds has a results framework that is applied to
individual country programs and, according to Treasury officials,
serves as the basis for future monitoring and evaluation of the
impact, outcomes, and outputs of the CIF-supported activities. The
responsibility for reporting on progress rests with the CIF's country
focal points and with multilateral development bank staff. For
example, the multilateral development banks implementing Clean
Technology Fund projects in a country are required to report annually
on the progress on core indicators. More specifically, the fund's
Geothermal Clean Energy Investment Project in Indonesia, financed and
implemented through the World Bank, includes results indicators on
annual greenhouse gas emissions reductions and increased supply of
geothermal capacity.
In addition, each of the multilateral development banks has its own
monitoring and evaluation process, and the banks' evaluation units
conduct evaluations of CIF projects as part of their regular
responsibilities. Treasury officials stated that a broader evaluation
of the CIF is being conducted by an independent committee and
representatives of multilateral development bank evaluation units, and
is due to be completed in 2013.
Other Agencies' Approaches to Monitoring and Evaluating FSF Activities
Vary:
The other key agencies that contributed to FSF--MCC, Ex-Im, and OPIC--
funded activities that were not part of the GCCI, and these agencies'
approaches to monitoring and evaluation vary based on their respective
missions and requirements. These agencies' funding supports activities
with reported climate-related benefits.
* MCC monitoring and evaluation focuses primarily on poverty
reduction. MCC's mission is to reduce poverty through economic growth,
and MCC officials stated that it monitors and evaluates projects
primarily for progress in achieving this goal using economic
indicators. According to MCC officials, MCC supports low carbon
economic development and helps partner countries address the risks of
climate change when it is consistent with MCC's core mission and
supports the primary and development objectives of a compact's primary
poverty alleviation goal. For example, MCC's monitoring and evaluation
plan for the Green Prosperity Project in Indonesia is focused on
indicators related to increasing productivity and incomes, but the
plan also includes indicators related to expanding renewable energy
capacity and improving sustainable land use and forest management.
* Ex-Im monitors its projects counted as FSF according to broader
agency requirements. Ex-Im's primary mission is to assist in financing
the export of U.S. goods and services to international markets.
According to Ex-Im officials, Ex-Im does not have climate change
indicators or related monitoring and evaluation requirements for its
projects, but it monitors its projects counted as FSF according to
broader agency requirements, including monitoring to ensure repayment.
The officials also told us that for projects that Ex-Im determines may
produce greenhouse gas emissions in excess of 25,000 metric tons of
carbon dioxide equivalent per year, the bank requires applicants to
provide information on the anticipated quantity of greenhouse gas
emissions.
* OPIC monitors greenhouse gas emissions of its projects to track
progress against a mandated emission goal. OPIC is the U.S.
government's development finance institution and its primary mission
is to mobilize private capital to promote development and advance U.S.
foreign policy. OPIC has a congressional requirement to achieve a 30-
percent reduction in the greenhouse gas emissions of its portfolio
over a 10-year period,[Footnote 45] and it monitors and reports
annually on the greenhouse gas emissions associated with its financing
to track progress toward achieving this goal. OPIC also reports on the
anticipated renewable energy megawatts generated and greenhouse gas
emissions avoided for selected clean energy projects, including the
projects counted as FSF.
Conclusions:
Assistance to developing countries to address the causes and effects
of climate change has become increasingly important for the United
States. Diplomatically, this assistance shows the United States'
commitment to its broader international agreements to address climate
change. It also demonstrates the United States' commitments to assist
developing nations that face the most significant adverse impacts of
climate change. As a member of the Conference of the Parties in Durban
in 2011, the United States agreed to additional reporting requirements
and guidelines beginning in 2014 but has not determined how to fulfill
this agreement. State made progress in its ability to collect and
report on assistance aimed to address climate change to developing
countries and voluntarily submitted three FSF reports containing
information on the range of U.S. FSF activities. However, challenges
remain, including determining a method for incorporating private
sector finance into U.S. climate finance totals. According to State
officials, the FSF reports helped meet U.S. diplomatic objectives by
informing recipient countries of the range of U.S. climate finance
activities occurring in these countries. However, if State does not
meet future reporting requirements, it will be more difficult to
demonstrate to international parties the United States' commitment to
climate finance. While State has started working with its
international counterparts to address some of the future reporting
requirements, our findings show that State does not currently collect
the data necessary to fully meet the 2014 Framework Convention
reporting requirements and guidelines.
State's challenges in collecting and reporting on foreign assistance
intended to address climate change are compounded by the lack of a
dedicated budget code to track over $1 billion in USAID climate change
assistance, due to the placement of climate change as a sub-element
within State and USAID's foreign assistance standardized program
structure. Without a specific line item for climate assistance for
developing countries, the agency must manually review data for over a
hundred missions. Without better accounting for this assistance at
USAID, both agencies will likely spend substantial and potentially
unnecessary resources manually tracking U.S. funding. Improving this
accounting may involve tradeoffs that merit consideration before
revising the standardized program structure. For example, changes to
the placement of climate change within the program structure may
affect the accounting for other types of environmental assistance. On
the other hand, the United States has made international commitments
to collect and report on climate change assistance to developing
countries as part of the administration's efforts to enhance the
transparency of foreign assistance. Furthermore, providing this
information could assist Congress in its oversight of foreign
assistance for climate change activities.
Recommendations for Executive Action:
We recommend that the Secretary of State take the following two
actions:
1. To ensure the United States meets its future reporting requirements
and guidelines under the Framework Convention, we recommend that State
determine how it will collect and report climate finance information
that will be required beginning in 2014. In doing so, State should
review the capabilities of its current data collection and reporting
process and consider what changes, if any, are needed to meet the
requirements and guidelines.
2. As State conducts reviews of the foreign assistance standardized
program structure, we recommend that State, in consultation with
USAID, consider the merits of elevating climate change within the
program structure to provide a specific budget code that improves
tracking of USAID climate change assistance.
Agency Comments:
We provided a draft of this report for comment to State, USAID,
Treasury, MCC, Ex-Im, and OPIC. We received written comments from
State, which are reproduced in full in appendix II. State agreed with
our recommendations and expressed willingness to take action. We also
received technical comments from State, USAID, Treasury, and MCC,
which we incorporated throughout our report as appropriate.
We are sending copies of this report to appropriate congressional
committees; the Secretaries of State and the Treasury, the
Administrator of USAID, the Chairman of the Export-Import Bank, and
the Chief Executive Officers of the Millennium Challenge Corporation
and the Overseas Private Investment Corporation. This report will also
be available at no charge on GAO's Web site at [hyperlink,
http://www.gao.gov].
If you or your staff have any questions about this report, please
contact Thomas Melito at (202) 512-9601 or melitot@gao.gov, or J.
Alfredo Gomez at (202) 512-4101 or gomezj@gao.gov. Contact points for
our Offices of Congressional Relations and Public Affairs may be found
on the last page of this report. GAO staff who made key contributions
to this report are listed in appendix III.
Sincerely yours,
Signed by:
Thomas Melito:
Director, International Affairs and Trade:
Signed by:
J. Alfredo Gomez:
Director, Natural Resources and Environment:
[End of section]
Appendix I: Objectives, Scope, and Methodology:
This report examines (1) the extent to which the United States
contributed to fast-start finance (FSF) and the types of activities
this funding supported, (2) how the Department of State (State)
collected and reported data on U.S. FSF funding and its plans for
future reporting, and (3) what is known about the effectiveness of
U.S. FSF activities. To address these objectives, we focused primarily
on the six agencies that provided over 95 percent of U.S. FSF
assistance in fiscal years 2010 through 2012: State, the U.S. Agency
for International Development (USAID), the Department of the Treasury
(Treasury), the Millennium Challenge Corporation (MCC), the Export-
Import Bank of the United States (Ex-Im), and the Overseas Private
Investment Corporation (OPIC). We reviewed and analyzed documents and
interviewed agency officials from these six agencies and from the U.S.
Trade and Development Agency (USTDA), the Environmental Protection
Agency (EPA), and the U.S. Forest Service, as well as officials from
the United Nations Framework Convention on Climate Change (Framework
Convention), the Organisation for Economic Co-operation and
Development, and nongovernmental organizations. We conducted fieldwork
in three countries--Ethiopia, Indonesia, and Mexico--that we selected
on the basis of FSF funding levels and sources; areas of focus
(adaptation, clean energy, and sustainable landscapes); project
implementation status; geographic diversity; country income level;
recommendations from agencies; and congressional interest. In these
countries, we met with U.S. embassy officials and implementing
partners, host-country government officials, multilateral development
banks, and other bilateral donors. We also visited project sites and
met with local implementing partners and recipients of the assistance.
To understand the extent to which the United States contributed to FSF
and the types of activities this funding supported, we reviewed
Framework Convention climate finance agreements and requirements, as
well as government-wide and agency specific initiatives and
strategies, and planning and programming documents. We reviewed FSF
activity and funding data submitted by these agencies to State, and
reviewed State's consolidated FSF data. We also reviewed State's and
other countries' FSF reports and submissions to the Framework
Convention. To assess the reliability of State's FSF data, we
interviewed agency officials about data quality control procedures and
reviewed relevant documentation. In addition, agency officials walked
us through their database and discussed the various controls used. We
determined that the data were sufficiently reliable for the purposes
of this report.
To examine how State collected and reported data on U.S. FSF funding,
we reviewed and analyzed FSF funding data submitted by the agencies to
State and reviewed State's own data on FSF. In addition, we reviewed
State's database for maintaining FSF submissions for the fiscal year
2012 FSF report and interviewed State officials responsible for
compiling the data and creating the FSF reports. We determined that
the data were sufficiently reliable for our purposes. In addition, we
reviewed the criteria used by State to determine the FSF eligibility
of activities listed in agency submissions. We also compared the
guidance for agencies on FSF submissions from State and the Office of
Management and Budget (OMB). To examine State's plans for future
reporting, we reviewed State reports and the reports of the Framework
Convention Conference of the Parties meetings. We interviewed agency
officials from the six agencies listed above, as well as officials
from EPA, U.S. Forest Service, USTDA, and OMB. In addition, we
obtained disbursement status data from the USAID program offices in
Ethiopia and Indonesia for all FSF activities for fiscal years 2010
through 2012. USAID in Mexico was unable to provide us with
disbursement status data for their FSF activities.
To examine what is known about the effectiveness of U.S. FSF
activities, we focused on the six agencies listed above. To examine
how these agencies monitored and evaluated the effectiveness of their
FSF activities, we reviewed agency goals and indicators, monitoring
and evaluation plans and reports, and interviewed agency officials.
We conducted this performance audit from May 2012 to September 2013 in
accordance with generally accepted government auditing standards.
Those standards require that we plan and perform the audit to obtain
sufficient, appropriate evidence to provide a reasonable basis for our
findings and conclusions based on our audit objectives. We believe
that the evidence obtained provides a reasonable basis for our
findings and conclusions based on our audit objectives.
[End of section]
Appendix II: Comments from the Department of State:
United States Department of State:
Washington, D.C. 20520:
September 9, 2013:
Dr. Loren Yager:
Managing Director:
International Affairs and Trade:
Government Accountability Office:
441 G Street, N.W.
Washington, D.C. 20548-0001:
Dear Dr. Yager:
We appreciate the opportunity to review your draft report, "Climate
Change: State Should Further Improve Its Reporting on Financial
Support to Developing Countries to Meet Future Requirements" GAO Job
Code 320914.
The enclosed Department of State comments are provided for
incorporation with this letter as an appendix to the final report.
If you have any questions concerning this response, please contact
Teresa Hobgood, Senior Policy Advisor, Bureau of Oceans and
International Environmental and Scientific Affairs at (202) 647-3550.
Sincerely,
Signed by:
[Illegible] for:
James L. Millette:
cc:
GAO — J. Alfredo Gomez:
OES — Dr. Kerri-Ann Jones:
State/OIG — Norm Brown:
Department of State Comments on GAO Draft Report:
Climate Change: State Should Further Improve Its Reporting on
Financial Support to Developing Countries to Meet Future Requirements
(GAO-13-829, GAO Code 320914):
Thank you for the opportunity to comment on the draft report on
reporting on financial data for international climate change
assistance to developing countries. The Department of State
appreciates GAO's analysis and recommendations.
Climate change is one of this century's signal global challenges. It
works against virtually every U.S. foreign policy goal — economic
development, peace and stability, and poverty alleviation. The United
States is leading the effort to forge a new global agreement that
would apply to all countries. We are using diplomatic tools and
development dollars to prepare vulnerable nations for climate impacts
and reduce the likelihood of dangerous climate change.
Climate change is already a top foreign policy priority for many
nations, and it will only grow in prominence in coming years. It
threatens to disrupt agriculture, fisheries, and water supply for many
regions of the world, and if left unchecked, will threaten the
continued viability of low-lying nations in the Pacific and Asia,
including strong U.S. allies. As recent damage from storms such as
Sandy and droughts in the nation's heartland suggest, projected
increases in the frequency and intensity of extreme weather events
also have the potential to devastate communities and impose enormous
costs in the United States in coming decades.
Addressing climate change successfully will require prompt and
decisive action by all nations. The United States, as the world's
preeminent economic and technological power and one of the largest
emitters of greenhouse gases, must lead. The Administration has made
it a priority to develop a sensible global response to the challenge.
Through successive rounds of negotiations, we have helped move the
world from an emissions regime that only includes a small subset of
countries and emissions to an approach in which all major economies,
including the world's emerging economies, have committed to take
specific, meaningful and transparent actions and meet specific targets
by 2020.
This represents significant progress, but there is much more to do.
This generation has a responsibility to leave a cleaner, safer and
more stable world to all those who come after us, and the world is not
on track to reduce emissions to levels that will enable us to avoid
dangerous climate impacts. As a result, the Administration will
continue to work as a matter of priority to develop a global effort
that applies to all that can enable us to meet this challenge
successfully.
Our foreign assistance funding enables us to play a leading role in
this global effort. Through our foreign assistance, we are able to
lead efforts to promote cleaner and more efficient energy, conserve
the world's remaining tropical rainforests, phase down chemicals with
high global warming potential, and support the poorest and most
vulnerable countries and communities in their efforts to cope with the
adverse impacts of severe weather events and climate change. Our
investments are consistent with and support the Administration's
broader development agenda. Our ability to meet major international
funding commitments thus far has helped secure the agreement of
developing countries to take on specific commitments to reduce
greenhouse gas emissions and to report and be reviewed on their
progress.
The Administration has devoted much attention to investing and
prioritizing strategically. In order to maximize our assistance
funding, we have taken significant steps to integrate climate change
considerations into all relevant development assistance activities. We
are working to leverage private investment, including foreign direct
investment and we are supporting developing countries' efforts to
determine the most effective approaches to address climate change, so
that they can make a robust contribution to the global effort over
time.
We are also actively engaging the major emerging economies, whose
emissions are projected to grow over coming decades, and whose
cooperation and engagement in this issue, along with our own, is
essential to leaving a positive legacy for future generations.
The Department of State appreciates the GAO's recognition of the
improvements made in collecting and reporting on our fulfillment of
the "Fast Start" climate finance commitment. Regarding GAO
Recommendation #1, the Department is actively preparing to provide
public reports through the UN Framework Convention on Climate Change
(UNFCCC) that will provide meaningful information following the
extensive information that the United States provided through the
three Fast Start Finance reports that were the focus of this GAO
study. Although some decisions remain regarding the precise nature of
future U.S. reporting, the Department is prepared to comply with the
new UNFCCC reporting guidelines. In line with GAO's recommendation,
the Department will continue to review the capabilities of its data
collection and reporting process and consider what changes, if any,
are needed.
[End of section]
Appendix III: GAO Contacts and Staff Acknowledgments:
GAO Contacts:
Thomas Melito, Director, International Affairs and Trade, (202) 512-
9601, or melitot@gao.gov.
J. Alfredo Gomez, Director, Natural Resources and Environment, (202)
512-4101, gomezj@gao.gov.
Staff Acknowledgments:
In addition to the contacts named above, Christine Broderick
(Assistant Director), Michael Hix (Assistant Director), Sada
Aksartova, Ming Chen, Debbie Chung, Marissa Dondoe, Cindy Gilbert,
Jeremy Latimer, Grace Lui, and Alana Miller made key contributions to
this report.
[End of section]
Footnotes:
[1] U.N. Doc. FCCC/CP/2009/11/Add.1, Dec. 2/CP.15, ¶ 8 (Dec. 18, 2009)
[hereinafter Copenhagen Accord].
[2] See United Nations Framework Convention on Climate Change, U.N.
Doc. A/AC237/18 (1992), reprinted in 31 I.L.M. 849 (1992) [hereinafter
Framework Convention]; and Copenhagen Accord, ¶ 8.
[3] The five other gases are methane, nitrous oxide, and three
synthetic gases--hydrofluorocarbons, perfluorocarbons, and sulfur
hexafluoride.
[4] Framework Convention, art. 4.
[5] United Nations Framework Convention on Climate Change, "The
Adaptation Process," FOCUS: Adaptation, accessed September 16, 2013,
[hyperlink, http://unfccc.int/focus/adaptation/items/6999.php].
[6] Under the Copenhagen Accord, priority countries for adaptation
finance include least developed countries, small island developing
states, and Africa. Copenhagen Accord ¶ 8.
[7] Following the GCCI announcement, the White House released in
October 2010 a strategy document on reducing emissions from
deforestation and forest degradation. This strategy outlines the U.S.
approach for increasing carbon sequestration by forests in developing
countries. In November 2010, State and USAID initiated the U.S.
Government Enhancing Capacity for Low Emission Development Strategies
program, an interagency effort to support developing countries'
efforts to increase sustainable development while slowing the growth
of emissions.
[8] Loan guarantees cover the repayment risks on the foreign
borrower's debt obligations, guaranteeing a lender that, in the event
of a payment default by the borrower, the agency will pay the
outstanding principal and interest.
[9] Export credit insurance helps U.S. exporters sell their goods
overseas by protecting them against the risk of foreign buyer or other
foreign debtor default for political or commercial reasons, allowing
them to extend credit to their international customers for short-term
or medium-term sales.
[10] According to State, 98.7 percent of federal funds that supported
activities as part of the GCCI activities counted toward the U.S. FSF
commitment
[11] The 17 agencies were State; USAID; Treasury; MCC; Ex-Im; OPIC;
the Departments of Commerce, Defense, and Energy; the Environmental
Protection Agency (EPA); National Aeronautics and Space
Administration; National Oceanic and Atmospheric Administration;
National Science Foundation; U.S. Army Corps of Engineers; U.S. Forest
Service; U.S. Trade and Development Agency; and the Peace Corps.
[12] During the FSF period, Australia reported contributing its FSF
funds roughly equally between adaptation and mitigation activities.
Many other countries reported contributing more toward mitigation than
adaptation activities.
[13] Generally, emissions certificates are tradable permits in a cap-
and-trade program, in which an overall emissions cap is set. Entities
covered by the program must hold these certificates to cover their
emissions.
[14] State and USAID officials commented that with the inclusion of an
integration objective, the Strategy made it USAID policy to
incorporate climate change risks and mitigation opportunities into the
broader portfolio of USAID programming, in particular into USAID
missions' Country Development and Coordination strategies.
[15] State officials noted that neither the United States nor any
other country considers contributions to the general resources of the
World Bank or other multilateral development banks as part of the FSF
contribution.
[16] The CIF consist of the Clean Technology Fund and the Strategic
Climate Fund, which are implemented through the multilateral
development banks. The Clean Technology Fund seeks to provide
developing and middle income countries with incentives to scale up
technologies with a high potential for long-term greenhouse gas
emissions savings. The Strategic Climate Fund supports programs to
promote sustainable forest management, integrate climate resilience
into development, and scale up renewable energy solutions in the
world's poorest countries.
[17] The GEF, established in October 1991 to promote global
environmental protection and environmentally sustainable development,
is an institution that serves as a financial mechanism for the
Framework Convention and several other international conventions.
Since 1994, the World Bank has served as the Trustee of the GEF Trust
Fund and provided administrative services.
[18] These local programs are governed by boards that include
representatives from local environmental groups and institutions, the
U.S. government, and the beneficiary government.
[19] The other 12 agencies provided a total of $225 million that was
counted toward the FSF contribution for activities that have climate-
related benefits.
[20] Ex-Im serves as the official export credit agency of the United
States and helps U.S. firms export goods and services by providing a
range of financial products, including direct loans, loan guarantees,
and insurance.
[21] OPIC provides development finance through financing, loan
guarantees, political risk insurance, and support for private equity
investment funds.
[22] State officials explained that they counted the Mongolia Compact
as part of the U.S. FSF contribution even though it was signed in
2008, because it was amended during the FSF period. The compact's
amendment added a new project specifically relating to reducing urban
air pollution by aiding the adoption of more energy efficient
technologies.
[23] MCC officials commented that MCC generally reported all relevant
FSF funding for compacts based on the year the compact was signed.
However, only a small portion of the compact amount is obligated at
signing, and the balance of the MCC funding is obligated at entry into
force.
[24] See Omnibus Appropriations Act, 2009, Pub. L. No. 111-8, 123
Stat. 524, 858.
[25] GAO, Export-Import Bank: Additional Analysis and Information
Could Better Inform Congress on Exposure, Risk, and Resources,
[hyperlink, http://www.gao.gov/products/GAO-13-620] (Washington, D.C.:
May 30, 2013).
[26] 22 U.S.C. § 2191b.
[27] See U.N. Doc. FCCC/CP/2011/9/Add.1, decision 2/CP.17, ¶¶ 12-5
(Dec. 11, 2011).
[28] The operational plans contained 1-year implementation plans and
budget information for each country's State and USAID mission office
and included data on climate change funding and activities, which
State used for the FSF reports.
[29] OMB did not assist State in collecting FSF data for fiscal year
2010 but did review the budget information that State collected,
according to officials from both agencies.
[30] State and OMB officials said that they adapted the list of
eligible FSF activities so that the activities on the revised list
would align more closely with those implemented by agencies other than
State and USAID.
[31] The standardized program structure was jointly developed by State
and USAID to establish a consistent way to categorize and account for
foreign assistance managed by State and USAID. This structure includes
five strategic objectives of U.S. foreign assistance--Peace and
Security, Governing Justly and Democratically, Investing in People,
Economic Growth, and Humanitarian Assistance--and defines the full set
of program areas and associated activities that fall under these
strategic objectives and establishes standard indicators for measuring
performance.
[32] The two nongovernmental organizations were the World Resources
Institute, a policy research organization focused on environmental and
socioeconomic development issues, and Climate Advisors, a consulting
firm focused on U.S. climate change policy and international climate
cooperation.
[33] U.N. Doc. FCCC/CP/2011/9/Add.1, decision 2/CP.17 (Dec. 11, 2011)
and UN Doc. FCCC/CP/2012/8/Add.3, decision 19/CP.18 (Dec. 8, 2012).
[34] U.N. Doc. FCCC/CP/2011/9/Add.1, decision 2/CP.17, ¶ 13 and Annex
I. In addition to the new biennial reports, developed countries will
also submit the sixth national communication to the Framework
Convention secretariat in January 2014. Developed countries report to
the Framework Convention secretariat through national communications
and biennial reports with information on the steps the countries are
taking or plan to take to implement the Framework Convention. Also, at
the meeting of the Conference of the Parties in Durban in 2011,
developed countries decided that in years when national communications
are submitted, developed countries should submit the biennial reports
as an annex to the national communications or as a separate report.
[35] In addition to the climate finance reporting requirements and
guidelines for the Framework Convention parties, the United States
also reports and will continue to report funding related to climate
change through other venues, primarily the Credit Reporting System of
the Development Assistance Committee at the OECD, and the
Administration's Foreign Assistance Dashboard. A 2012 OMB bulletin
provides guidance on reporting to the OECD and for the Foreign
Assistance Dashboard website as part of the U.S. government's overall
effort to make information on foreign assistance programs more
transparent. The Foreign Assistance Dashboard is a key deliverable of
the U.S. Government's Open Government Partnership National Action Plan
to promote openness and transparency. The Dashboard serves as a tool
to visualize foreign assistance data. It can be found at [hyperlink,
http://www.foreignassistance.gov]. In addition, the OECD developed a
marker system in collaboration with the Framework Convention aimed at
tracking resource flows for climate change activities. The markers,
known as Rio Markers, categorize aid activities to indicate whether or
not an activity targets climate change mitigation or adaptation as a
principal or significant objective. Reporting with Rio Markers became
mandatory with the 2007 report to the OECD.
[36] Thomas R. Karl, Jerry M. Melillo, and Thomas C. Peterson, eds.,
Global Climate Change Impacts in the United States (New York, NY:
Cambridge University Press, 2009). This document, referred to as the
2009 National Climate Assessment, is in the process of being updated,
as the Global Change Research Act of 1990 requires that a scientific
assessment be provided to the President and Congress not less
frequently than every 4 years. See information on the 2013 National
Climate Assessment at [hyperlink, http://www.globalchange.gov/what-we-
do/assessment].
[37] See National Research Council, Climate Change: Evidence, Impacts,
and Choices (Washington, D.C.: 2012). The National Research Council is
the operating arm of the National Academy of Sciences and National
Academy of Engineering.
[38] GAO, Climate Change Issues: Options for Addressing Challenges to
Carbon Offset Quality, [hyperlink,
http://www.gao.gov/products/GAO-11-345] (Washington, D.C.: Feb.15,
2011).
[39] USAID officials commented that they see U.S. support for
countries' low emissions development strategies, which promote
national-level greenhouse gas inventories and policy reforms, as a
response to "leakage." These officials commented that by monitoring
greenhouse gas emissions and forest cover nationwide, countries will
be able to monitor the net effect of all sustainable forest and land
use efforts.
[40] [hyperlink, http://www.gao.gov/products/GAO-11-345].
[41] Outputs measure the direct products and services delivered by
programs or projects; outcomes measure the results of those products
and services.
[42] USAID defines large projects as those whose dollar value equals
or exceeds the average project value for the operating unit.
[43] Consistent with USAID's evaluation policy, State issued its own
evaluation policy in February 2012, which also includes a requirement
that large programs be evaluated at least once.
[44] According to Treasury officials, for the bilateral Tropical
Forest Conservation Act (TFCA) activities that Treasury funds,
Treasury also conducts oversight through (1) participation in the
interagency group that monitors TFCA issues, (2) reports from local
TFCA programs, and (3) evaluations of individual country programs that
Treasury funds through allocations to USAID. The U.S. government,
according to these Treasury officials, also has direct oversight of
local programs through its participation on local TFCA country boards.
[45] OPIC's requirement is to reduce the greenhouse gas emissions
associated with projects and sub-projects in its portfolio by 30
percent over a 10-year period from June 30, 2008, and by 50 percent
over a 15-year period from June 30, 2008. 22 U.S.C. § 2191b.
[End of section]
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